LSC Communications, Inc. (NYSE: LKSD) today reported financial results for the third quarter of 2017.
3Q 2017 Highlights:
• Net sales of $935 million compared to $949 million in the third quarter of 2016
• GAAP net loss of $3 million, or $0.07 per diluted share
• Non-GAAP net income of $25 million, or $0.73 per diluted share
• Non-GAAP adjusted EBITDA of $96 million, or 10.3% of net sales, compared to $101 million, or 10.6% of net sales, in the third quarter of 2016
“We are pleased with our third quarter results. As the year has progressed, we have improved our year-over-year earnings trend, and we continue to focus on integrating our recent acquisitions, to realize synergy opportunities and further drive productivity savings,” said Thomas J. Quinlan III, LSC Communications’ Chairman and Chief Executive Officer. “In our first full year as a standalone company, we have made significant progress executing our strategy with targeted acquisitions and investments that position LSC to better serve our customers with enhanced capabilities and technology and improved geographic reach. As we approach the end of the year, we are updating our full year guidance to reflect the expected impact of the acquisition of Publishers Press, as well as ongoing trends in our business and expect full year non-GAAP adjusted EBITDA to be approximately $340 million.”
Third quarter net sales were $935 million, down $14 million, or 1.5%, from the third quarter of 2016. Pro forma for acquisitions completed in the last four quarters, changes in foreign exchange rates, and pass-through paper sales, organic net sales decreased 6.6% from the third quarter of 2016. The decrease in organic net sales was due to lower volume and price declines in both the Print and Office Products segments.
Third quarter 2017 net loss was $3 million, or $0.07 per diluted share, compared to net income of $38 million, or $1.17 per diluted share, in the third quarter of 2016. The third quarter of 2017 included $19 million of interest expense primarily related to debt issued in connection with the October 1, 2016 separation from RR Donnelley & Sons Company, while no interest expense was allocated to LSC Communications in the third quarter of 2016. The effective tax rate for the third quarter of 2017 reflected the impact of non-deductible goodwill impairment charges. Third quarter net income included net of tax charges of $28 million and $4 million in 2017 and 2016, respectively, both of which are excluded from the presentation of non-GAAP net income. Additional details regarding the amount and nature of these adjustments and other items are included in the attached schedules.
Non-GAAP Adjusted EBITDA and Non-GAAP Net Income
Non-GAAP adjusted EBITDA in the third quarter of 2017 was $96 million, or 10.3% of net sales, compared to $101 million, or 10.6% of net sales, in the third quarter of 2016. The decrease in non-GAAP adjusted EBITDA was primarily due to volume declines and price pressure in the Print and Office Products segments as well as product mix within the Print segment, partially offset by ongoing productivity and cost control initiatives and the impact from the acquisitions.
Non-GAAP net income totaled $25 million, or $0.73 per diluted share, in the third quarter of 2017 compared to non-GAAP net income of $42 million, or $1.26 per diluted share in the third quarter of 2016. Non-GAAP net income in the third quarter of 2017 included $19 million of interest expense primarily related to debt issued in connection with the separation from RR Donnelley, while no interest expense was allocated to LSC Communications in the third quarter of 2016. Reconciliations of net income to non-GAAP adjusted EBITDA and non-GAAP net income are presented in the attached schedules.
more detail at: http://investor.lsccom.com/news-releases/2017/11-02-2017-103049712